Maximize your refund with these overlooked tax write-offs
Tax season is just around the corner, and with some smart planning, you can make sure you don’t leave any money on the table.
Tax write-offs you shouldn't miss before the year ends
Tax season is just around the corner, and with some smart planning, you can make sure you don’t leave any money on the table. Certain tax deductions and credits often get overlooked, but they can make a significant difference in maximizing your refund.
Before we get started: a tax credit is a dollar-for-dollar reduction of the money you owe in taxes, while a tax deduction will decrease your taxable income, leading to a slightly lower tax bill. Here’s a guide to some commonly missed tax write-offs and how you can take advantage of them.
Tax deductions
Home office deduction
If you work from home, whether as a freelancer, small business owner, or remote employee, you may qualify for a home office deduction. The IRS allows you to deduct a portion of your rent, mortgage interest, utilities, and other expenses, as long as you use part of your home exclusively for business purposes. The simplified deduction allows $5 per square foot, up to a maximum of $1,500 per year.
Tip:Even if you rent, you can still claim this deduction as long as the space is dedicated exclusively to work.
Medical and dental expenses
Medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI) can be deducted. (Learn how to calculate your AGI here.) This can include payments for doctor's visits, surgery, prescriptions, dental treatments, and even some long-term care expenses. You can also deduct health insurance premiums if you're self-employed.
Tip:Don’t forget about smaller expenses like mileage for medical appointments and out-of-pocket costs for prescription medications.
Charitable donations
Donations to qualified charities can be deducted from your taxable income. This includes not only cash donations but also non-cash contributions like clothing, household items, or even mileage driven for charity-related activities. Keep records of all donations and get receipts for non-cash contributions.
Tip:Consider making a charitable contribution before the end of the year to boost your deductions.
Student loan interest
If you paid interest on student loans, you might be able to deduct up to $2,500, even if you don’t itemize your taxes. There are income limits to qualify, but this deduction can provide some relief for borrowers paying down educational debt (Kiplinger.com) .
Tax credits
State and local taxes (SALT)
The state and local tax (SALT) deduction allows you to deduct certain state and local taxes paid during the year. This includes income, sales, and property taxes, but it’s capped at $10,000 per year for individuals and married couples filing jointly. Make sure you include state taxes paid from the previous tax year if they weren’t claimed (FinanceBuzz) (TurboTax).
Retirement savings contributions credit (saver's credit)
The Saver’s Credit is designed for low- to moderate-income taxpayers who contribute to retirement accounts like IRAs and 401(k)s. Depending on your income, you can receive a credit worth up to $1,000 (or $2,000 for married couples). Contributions made before the tax deadline can still count for the previous tax year (NerdWallet: Finance smarter) .
Child and dependent care credit
If you paid for child care or adult dependent care so that you could work or look for work, you may be eligible for a credit covering a percentage of those expenses. This credit applies to children under 13 or dependents who require care due to physical or mental limitations (TurboTax).
Energy-efficient home improvements
You can get a tax credit for certain energy-efficient home improvements such as installing solar panels, upgrading to energy-efficient windows, or adding insulation. The Residential Energy Efficient Property Credit can cover a portion of these costs.
Tip:Save receipts and installation documentation to substantiate your claims.
Maximize your refund before the year ends
Take the time to review these commonly overlooked tax deductions and credits before the year ends. By claiming these expenses, you can potentially lower your tax bill and keep more money in your pocket. Click here to learn more about How Our Tax Planner Can Help You Save.
FAQs
Common tax write-off questions
What’s the difference between a tax credit and a tax deduction?
What documentation do I need for charitable donations?
How can I claim the home office deduction if I work remotely?
Planning Ahead
Tax Prep
